Government Intervention in the Market

question 61

Multiple Choice

Government intervention in the market

• A)Always involves an opportunity cost.
• B)Never involves an opportunity cost because only market activities result in other goods and services being given up.
• C)Does not involve an opportunity cost if market outcomes are improved.
• D)Results in the free-rider dilemma.

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Definitions:

Cost Plus Pricing

A pricing strategy where a fixed percentage or amount is added to the cost of producing a product to determine its sale price.

Parallel Market

An unofficial market where goods are traded outside of the official channels, often at a different price point.

Dumping Strategy

A practice where companies sell products in foreign markets at prices lower than those in their domestic market, often to increase market share or unload surplus inventory.

Profit Margin

The ratio of a company's net income divided by its revenue, indicating how much profit the company makes for each dollar of sales.